Sveaskog merges with AssiDomän to form a leading forest management company

Sveaskog merges with AssiDomän to form a leading forest management company The Swedish State through Sveaskog has decided to make a public offer to the shareholders of AssiDomän. The total value of the offer and the shares in Billerud received as dividend from AssiDomän amounts to approximately SEK 280 per share in AssiDomän, of which the shares in Billerud represent approximately SEK 36. For each share in AssiDomän, ex right for dividend of shares in Billerud (value approximately SEK 23), Sveaskog offers SEK 244 in cash and shares and/or fractions of shares in Billerud, with an estimated value of approximately SEK 13 per share in AssiDomän. Adjusted for the redemption of SEK 12,000 million (corresponding to approximately SEK 126 per share) previously announced by the Board of Directors of AssiDomän, the offer represents a premium of approximately 78 per cent. Based on the closing price of the AssiDomän share of SEK 223 on September 27, 2001 (i.e. the day before Sveaskog and AssiDomän announced that the companies had initiated discussions regarding the possibilities for a public offer for the shares in AssiDomän), adjusted for dividend of Billerud of approximately SEK 23, i.e. approximately SEK 200, the offer represents a premium of approximately 29 per cent. The Board of Directors of AssiDomän unanimously recommends the offer. Alecta, SEB Fonder and SEB Trygg Liv have declared that they are in favour of the Offer. Bo Dockered, Chairman of the Board of Directors of Sveaskog, comments: "Two years ago the Swedish Parliament passed a resolution that aimed to create a more rational forest management, a better functioning timber market and an increased environmental consideration. With the State as sole owner of Sveaskog's and AssiDomän's forest land we can better satisfy these interests". Lars Sköld, CEO Sveaskog, comments: "Sveaskog and AssiDomän are largely similar in terms of business ideas, vision, strategies and organisations. We will continue with commercial forest management with high enviromental standards. Together we are creating the conditions to succeed in a range of development projects within forestry and other operations." Public offer to the shareholders of AssiDomän AB The Board of Directors of Sveaskog AB ("Sveaskog") has decided to make a public offer to acquire all outstanding shares in AssiDomän AB ("AssiDomän") (the "Offer"). Sveaskog is 100 per cent owned by the Swedish State ("the State") through Förvaltningsaktiebolaget Stattum ("Stattum"). The State also owns, through Stattum and the Ministry of Industry, Employment and Communications, a total of 33,605,190 shares, representing 35.3 per cent of the capital and votes, in AssiDomän. Upon the completion of the Offer, these shares will be transferred to Sveaskog. At the annual general meeting of AssiDomän on May 22, 2001 it was resolved to distribute all the shares in Billerud AB ("Billerud") owned by AssiDomän to AssiDomän's shareholders. AssiDomän will, in accordance with a previous agreement, acquire 20 per cent of the total number of shares in Billerud from Stora Enso, after which the distribution will comprise 70 per cent of the total number of shares in Billerud. The total value of the Offer and the shares received as dividend from AssiDomän 1) amounts to approximately SEK 280 per share in AssiDomän, of which the shares in Billerud represent approximately SEK 36. 2) Holders of shares in AssiDomän are offered, for each share in AssiDomän ex right for dividend of shares in Billerud (value approximately SEK 232) · SEK 244 in cash and · shares and/or fractions of shares in Billerud 3) , with an estimated value of approximately SEK 13 per share in AssiDomän.2 No commission will be charged for shares tendered under the Offer. The Board of Directors of AssiDomän has previously announced its intention to propose a transfer of approximately SEK 12,000 million, corresponding to approximately SEK 126 per share, to the shareholders of AssiDomän through redemption of shares. The redemption amount will now instead be received as a part of the Offer. Adjusted for these SEK 126 per share and the dividend of shares in Billerud of approximately SEK 232 per share, the Offer represents a premium of approximately 78 per cent, based on the closing price of the AssiDomän share of SEK 223 on September 27, 2001. 4) Based on the average closing price of the AssiDomän share during the period August 17, 2001 to September 27, 2001 5) , and with corresponding adjustments, the Offer represents a premium of approximately 67 per cent. Based on the closing price of the AssiDomän share of SEK 223 on September 27, 20014, adjusted for dividend of Billerud of approximately SEK 232, i.e. approximately SEK 200, the Offer represents a premium of approximately 29 per cent. Based on the average closing price of the AssiDomän share during the period August 17, 2001 to September 27, 2001 6) , the Offer represents a premium of approximately 26 per cent. The Board of Directors of AssiDomän has unanimously decided to recommend shareholders of AssiDomän to accept the Offer. Alecta, SEB Fonder and SEB Trygg Liv, together representing 11.3 per cent of the capital and votes in AssiDomän, have announced that they are in favour of the Offer. The State and these shareholders together own shares representing 46.6 per cent of the capital and votes in AssiDomän. Background and rationale Forest is Sweden's most important natural resource. It is renewable and the forestry sector as a whole is one of Sweden's largest net exporters. The development of the forestry sector is therefore of crucial importance for further development of the Swedish economy. The State has always assumed responsibility for the development of Swedish forestry. Education and research in forestry has always been in the forefront. In many countries the state or other parts of the public sector owns considerable amounts of forestland. The State as a forestland owner has old custom in Sweden. In the beginning of the 1990's, Domänverket managed approximately 3.5 million hectares of active forestland and 6.5 million hectares of other land. There are a number of reasons for the State to own considerable areas of forestland: · A state ownership recognises the large economic, experience and cultural values in the forest. · State ownership facilitates long-term management of larger adjacent areas in order to e.g. preserve biological diversity and from an environmental and cultural perspective especially important forestland. · State ownership of forest may also increase competition for wood, which results in increased supply for sawmills. · State ownership gives opportunity for improved geographic structure and also facilitates land swaps with other owners. Through Sveaskog, the State owns approximately 900,000 hectares of productive forestland, corresponding to 4.0 per cent of the total Swedish forestland of 22,212,000 hectares. Added to this is an area of 749,000 hectares, corresponding to 3.4 per cent, which is managed by the Swedish Property Board, a number of public authorities and companies. The State's forestland holdings tally 1,649,000 hectares or 7.4 per cent of the Swedish forestland. With respect to where the forestland is located the holdings measured in harvest volume is far more limited, approximately 2 per cent. In most western European countries and in North America the state holdings are far greater than in Sweden. The State now takes an additional initiative to develop the Swedish forestry by proposing that the State acquires all outstanding shares in AssiDomän. The purpose of the acquisition is to once again unite AssiDomän's forestland with Sveaskog's. Sveaskog and AssiDomän both run a modern, rational, profitable and sustainable forestry in their forests, and these principles will prevail. Sveaskog Sveaskog has now been operating for two years. The company has enjoyed a strong support for its working methods and has been well established in the market for timber as an independent supplier. However, the company is too small to meet the guidelines decided by the Swedish Parliament. The State's ambition to obtain an effective management of a clump with dispersed allocation, possibility to offer land for exchange and management of land that is of interest for conservation, can not be fulfilled with the State's current land holdings. There are therefore reasons for the State to, if the goals for Sveaskog are to be fulfilled, incorporate AssiDomän's forest with Sveaskog. An acquisition of AssiDomän's forest of 2,400,000 hectares would increase the State's holding of productive forestland with 10.8 percentage points to an aggregate of 18.2 per cent of Sweden's total area of productive forest. With respect to where the forestland is located, the total harvest volume will amount to approximately 10 per cent. AssiDomän AssiDomän's operations have, through divestitures during 2000 and 2001, been focused on ownership, management and cultivation of forestland. The company's dominating asset is now 2.4 million hectares of productive forestland. The Group also includes a sawmill operation and the Frövi cartonboard mill. Furthermore, AssiDomän owns shares in Billerud which are to be distributed to the shareholders of AssiDomän no later than November 2001. AssiDomän's successful effort to find new strong structures for the industrial operations in the sawmills and Frövi will continue. The State shall not, according to the government, be a long-term owner of industrial operations within forestry. Effects from the acquisition The acquisition is expected to result in a number of advantages: · Geographic structure of land is improved, which facilitates land swaps on commercial terms with other landowners. · Competition for timber is increased which means that the wood to a higher degree will be sold on a commercial and open market as well as that sawmills can access wood more easily. · Allocation of land to nature reserves will be facilitated, both directly and through increased opportunities to offer land for compensation. Conditions for the Offer The Offer is conditional upon the following: · That the Offer is accepted to such an extent that Sveaskog becomes owner of more than 90 per cent of the shares in AssiDomän. However, Sveaskog reserves the right to implement the Offer at lower acceptance levels. · That the Swedish Parliament, before the Christmas break, which commences on December 16, 2001, makes the necessary resolutions for the implementation of the Offer and Sveaskog's acquisition of the AssiDomän shares. 7) · That AssiDomän carries out the dividend of shares in Billerud and that the record date for receiving the dividend as well as the first day of listing of the Billerud share on the Stockholm Exchange occurs no later than November 30, 2001. · That all necessary approvals by the authorities are obtained on terms, which, in Sveaskog's view, do not materially affect the Offer or the acquisition of AssiDomän negatively. · That the acquisition, before the announcement of the implementation of the Offer, is not entirely or partially made impossible or materially obstructed as a result of legislation, court rulings, authority decisions or similar in Sweden or abroad or for other reasons outside of Sveaskog's control. Sveaskog reserves the right to waive any of the above conditions for the Offer. Financing Under the condition that the Swedish Parliament makes the necessary resolutions for the implementation of the Offer and the Sveaskog acquisition of the AssiDomän shares, the National Debt Office will grant Sveaskog a bridge financing facility of approximately SEK 12,000 million. The State will make a contribution of approximately SEK 1,500 million to Sveaskog, corresponding to the amount received in conjunction with the AssiDomän redemption in March 2001. Furthermore, Sveaskog has secured additional financing to such extent that the Offer can be completed. The Billerud shares that the State will receive from AssiDomän will comprise a part of the Offer. At completion of the Offer the Swedish State's 35.3 per cent holding in AssiDomän will be transferred to Sveaskog. The credit facility with the National Debt Office will be refinanced following completion of the transaction. Overview time table A prospectus regarding the Offer is expected to be distributed to shareholders in AssiDomän on or about November 16, 2001. The acceptance period for the Offer is expected to run from November 19, 2001 to December 14, 2001. Provided that Sveaskog implements the Offer no later than December 21, 2001, settlement to those shareholders who have accepted the Offer is estimated to begin on December 28, 2001. Sveaskog reserves the right to extend the acceptance period, as well as to postpone the settlement date. Advisors The Swedish State, through the Ministry of Industry, Employment and Communications, has appointed Erneholm & Haskel as financial advisor. Sveaskog has appointed Enskilda Securities and Handelsbanken Investment Banking as financial advisors and Mannheimer Swartling Advokatbyrå as legal advisor in the transaction. Stockholm, October 10, 2001 Sveaskog AB (publ) The Board of Directors For further information, please contact: Bo Dockered, Chairman of the Board of Directors of Sveaskog, +46 706 74 01 19 Lars Sköld, CEO Sveaskog, +46 705 37 97 70 Information about the Offer and about Sveaskog can be found on www.sveaskog.se. Billerud Billerud was established on January 1, 2001 through the merger of AssiDomän's Skärblacka and Karlsborg paper mills with Stora Enso's Gruvön paper mill. Billerud is 50 per cent owned by AssiDomän and 50 per cent by Stora Enso. With an annual production capacity of nearly 1.3 million tons of pulp and paper of which more than 80 per cent is sold within Europe, Billerud is one of Europe's leading pulp and paper producers in its main product areas. Billerud's specialisation in several well-defined product areas, primarily kraft paper, containerboard and pulp, creates opportunities to meet the demands for capacity, size and quality that the current consolidation of the global packaging industry creates. Billerud has invested a total of approximately SEK 4 billion during the years 1996-2000. Billerud's pro forma sales in 2000 amounted to approximately SEK 6.7 billion, with a pro forma operating profit of SEK 1,384 million. The combination of the three mills, including increased capacity as a result of recent investments, is expected to improve earnings by approximately SEK 200 million, with full effect reached at the end of 2003, provided normal capacity utilisation. Billerud organises its production and sales in three product areas: Kraft paper, Containerboard and Market pulp. Besides in Scandinavia, Billerud has a local presence in other important European markets, including through its sales offices in the Benelux countries, France, Italy, Spain, the UK and Germany. Key financial data 8) 199 199 199 199 200 Jan-Jun Jan- 6 7 8 9 0 2000 Jun 2001 Turnover, SEK million 5,2 5,4 5,4 5,4 6,7 3,208 3,588 45 02 98 42 05 Operating profit, SEK 131 386 317 309 1,3 515 788 million 84 Shareholders' equity, - - - - 2,2 - 2,749 SEK million 24 Capital employed, SEK 2,9 3,4 3,9 4,4 4,8 4,658 4,853 million 08 73 60 52 04 Gross margin, % 5% 11% 10% 11% 25% 21% 27% Operating margin, % 3% 7% 6% 6% 21% 16% 22% Return on capital 5% 12% 9% 7% 30% 22% 34% employed, % 9) Debt/equity ratio, - - - - 1.2 - 0.8 times 10) Equity/asset ratio, % - - - - 32% - 41% 3 Average number of 2,7 2,5 2,5 2,4 2,4 2,494 2,412 employees 78 93 63 97 42 Not for distribution in the US, Australia, Japan or Canada. The Offer does not apply to persons whose participation requires further prospectuses, filings or other measures in excess of those implied by Swedish law. The information that appears in this document is a translation of, and accordingly corresponds in all material respects with, the text of the Swedish press release. In the event of any contradiction between the text contained in this document and the Swedish press release, the latter shall prevail. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/10/10/20011010BIT00710/bit0001.doc http://www.waymaker.net/bitonline/2001/10/10/20011010BIT00710/bit0001.pdf